When is control measured?

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This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

A statutory accounting period of a CFC is a period of 12 months ending 30 June, unless the CFC makes an election to use another period. The control test is applied at the end of a CFC's statutory accounting period to check whether income of the CFC is to be attributed.

It may also be necessary to measure control at the time a CFC pays a dividend to another CFC or to a controlled foreign trust or at the time a CFC changes residence.

Election to change a CFC's statutory accounting period

A CFC can make an election to change its statutory accounting period only if the accounting period is:

regularly used by the CFC for complying with the tax law of a foreign country, or

regularly used by the CFC for reporting to its shareholders.

A CFC may also elect in writing to adopt a statutory accounting period ending on a date other than 30 June if the period is regularly used for complying with the tax laws of the CFC's country of residence or is regularly used for reporting to the CFC's shareholders. You may make this election on behalf of a wholly owned CFC.

A CFC may subsequently elect another statutory account period ending on any date, including 30 June, provided the above conditions are satisfied.

Where a CFC chooses another statutory accounting period, it must complete the current statutory accounting period. The intervening statutory accounting period - from the last day of the current period to the beginning of the new period - will be less than 12 months. The new and subsequent statutory accounting periods will be 12 months.

Example 4

Statutory accounting periods

If a company with a statutory accounting period ending 30 June 2002 elected on 30 August 2001 to change to a statutory account period ending 30 September, it would have statutory accounting periods of:

1 July 2001 to 30 June 2002

1 July 2002 to 30 September 2002

1 October 2002 to 30 September 2003, and

subsequent 12-month statutory accounting periods ending 30 September.

It is not necessary for a CFC to complete the current statutory accounting period before beginning a new period if the election is made when the CFC first comes into existence or where a company first becomes a CFC.

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